Gold Analysis: XAU/USD Holds Above Key Support Ahead of the Fed Decision

Over the last few trading sessions, gold has managed to stage a modest recovery. The precious metal has gained more than 1.7% across the last two sessions, a move that has introduced some buying momentum after several weeks of sustained pressure on prices.

For now, this rebound appears to be driven largely by the cautious atmosphere dominating markets ahead of the Federal Reserve's monetary policy decision. Current expectations suggest the central bank will leave interest rates unchanged, a scenario that has helped reduce some of the recent pressure on the metal. At the same time, gold has found support around $4,000 per ounce area, a level that has once again acted as an important floor for recent declines.

The combination of these factors has allowed gold to recover part of the ground lost in recent weeks. However, demand activity still does not appear strong enough to confirm a meaningful shift in the broader trend. As a result, the metal remains highly sensitive to tomorrow's Fed announcement, and a phase of indecision or even renewed weakness could continue to play an important role in the behavior of XAU/USD in the coming sessions.

What Is Expected from the Fed Meeting?

With only one session remaining before the Federal Reserve announces its interest rate decision, markets continue to expect the benchmark rate to remain unchanged at 4.00%. Current market pricing assigns more than 92% probability to this outcome, suggesting investors are not expecting major surprises from the immediate policy decision.

However, attention has increasingly shifted toward the Fed's post-meeting comments. Markets remain uncertain as to whether the institution will maintain a relatively cautious stance or begin reinforcing a more restrictive tone for the months ahead. As a result, the policy statement and subsequent comments may prove even more important than the rate decision itself.

Source: CMEGROUP

For now, expectations of policy stability appear to have reduced part of the pressure on rate-sensitive assets such as gold. As the Fed meeting approaches, the metal has managed to stabilize and recover near an important support zone.

This recovery also coincides with gold reaching key lows around the $4,000 per ounce area, a level that has acted as an important barrier during recent months. The combination of a major technical support zone and expectations of stable monetary policy has helped the metal recover part of its recent losses.

That said, this does not mean that pressure on gold has disappeared. Since the beginning of 2026, gold's performance has become increasingly linked to developments in the U.S. bond market. For several months, rising 10-year Treasury yields were accompanied by weaker demand for gold, as bonds increasingly offered investors a defensive alternative with more attractive returns.

In recent sessions, that relationship has moderated as Treasury yields have begun to ease. This development has reduced part of the pressure coming from competing markets and has helped demand around gold stabilize to some extent.

However, this is where the Fed decision becomes important once again. If comments following the meeting reinforce expectations of a more aggressive central bank over the coming months, Treasury yields could resume their recovery. Under that scenario, the relative attractiveness of bonds could strengthen once again and make it more difficult for gold to consolidate its recent recovery, particularly as fixed income remains one of gold's primary competing markets in both the short and medium term.

Source: TradingEconomics

Another important factor is that, despite the recent two-session rebound, demand activity still does not show particularly strong signs of recovery. Trading volume within the gold futures market continues to develop below the levels observed at the end of September.

As of October 26, trading activity remained only slightly above 150,000 contracts, a figure that continues to reflect a meaningful slowdown compared with the activity levels observed several weeks ago. This remains important because it suggests that the recent price recovery has not yet been accompanied by a significant increase in investor participation.

As a result, caution continues to be a key characteristic of the gold market and reinforces the idea that many participants are waiting for the Federal Reserve decision before taking on more substantial positions.

Source: CMEGROUP

With all of this in mind, gold remains highly sensitive to the upcoming Federal Reserve meeting. Although prices have managed to recover in recent sessions, demand activity still lacks the strength needed to confirm a meaningful shift in the broader market environment. For that reason, investors remain focused on the Fed's post-meeting comments, as a more aggressive-than-expected tone could once again support Treasury yields and reduce the relative appeal of gold. Under this scenario, a phase of indecision or even renewed weakness could begin to regain prominence within XAU/USD price action over the coming weeks.

 

Gold Technical Forecast

Source: StoneX, Tradingview

• The bearish trend remains the dominant structure: Although gold has managed to stage a moderate recovery in recent sessions, the move remains insufficient to challenge the broader bearish trendline that has remained in place for several months on the daily chart. Unless buying pressure begins approaching more important technical barriers, the prevailing downtrend is likely to remain the dominant structure and could continue influencing price action in the weeks ahead.
   

• RSI: The RSI remains below the 50 neutral level, indicating that selling momentum continues to dominate over the last 14 trading sessions. This reading suggests that despite the recent recovery attempt, the broader bearish bias remains relevant within gold's overall market structure.
   

• TRIX: A similar picture can be observed in the TRIX indicator, whose line continues to develop below the 0 neutral level. This reading indicates that longer-term exponential moving averages continue to reflect a bearish structure and supports the view that selling pressure remains relevant within the broader market environment.
   

Key Levels to Watch:

• $4,200 – Key Resistance: An important high from recent weeks that now represents the main upside barrier on the chart. A sustained move above this level could begin to signal a stronger recovery and open the door to the development of a short-term bullish trend.
   

• $4,100 – Near-Term Barrier: A recent retracement zone that currently serves as the primary area of neutrality within gold's price action. Continued trading around this level without a clear directional move could support the development of a more established consolidation phase.
   

• $4,000 – Critical Support: An important support zone that also coincides with a major psychological level for the market. A return toward this area could bring selling pressure back into focus and potentially end the recent stabilization phase, favoring an extension of the dominant bearish trend over the coming weeks.
   

Written by Julian Pineda, CFA, CMT – Market Analyst

Follow him on: @julianpineda25